Taxand USA delves a little deeper into some of the principles and specifics proposed by both the House’s Blueprint and the Trump Plan. While the Trump Plan in many respects is short on detail, the similarities in principle with the House’s Blueprint provide a pretty clear picture of the key points of expected draft legislation, with the Blueprint likely being the foundation.

 

Whatever your political affiliation might be, the recent election of Donald Trump to be the US’ 45th president and the Republicans maintaining control of both the House of Representatives and the Senate presents us with the possibility of perhaps the most significant tax reform since the Reagan Tax Reform Act of 1986. After recently marking the 30th anniversary of the 1986 Act and concluding one of the most contentious elections of our lifetimes, President-elect Trump is now working to pull together his administration and establish its priorities for the first 100 days and beyond while Congress continues to flesh out its proposals for comprehensive tax reform. Although a number of tax reform proposals are circling in Congress, the House Republicans led by Speaker Paul Ryan (R-Wisconsin) have been working since early 2016 to prepare to work with the incoming president on such reform with the proposal put forth by the House Ways and Means Committee in its “A Better Way, Our Vision for a Confident America” (the Blueprint).

 

Given the many similarities between Trump’s tax plan (the Trump Plan) and the GOP’s Blueprint, as well as Trump’s likely emphasis on spurring economic growth, it is likely that Trump will put tax reform high on his list of priorities. The House, under the leadership of Speaker Paul Ryan and the Ways and Means Committee Chairman Kevin Brady of (R-Texas) and his Republican colleagues, put forth the Blueprint for tax reform earlier in 2016 with the stated goals of “creating jobs, growing the economy, raising wages by reducing rates, removing special interest carve-outs, and making our broken tax code simpler and fairer” and is working to draft legislation by early 2017. Any reform along the lines of the Blueprint or the Trump Plan would mark the largest corporate tax rate cut in US history and a dramatic move towards a simpler tax system and closer to a consumption tax.

 

High-level, the GOP Blueprint proposes lowering the corporate tax rate from 35 percent to 20 percent (versus 15 percent under the Trump Plan), along with modifying the taxation of pass-through entities and sole proprietorships. For individuals, the Blueprint and the Trump Plan provide for three reduced individual income tax rates – 12 percent, 25 percent and 33 percent.

 

Discover more: Making the tax code great again…or something like that

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Taxand's Take

As with most presidencies, it is important to remember that the political window for enacting change can be short and outside events can often alter or dictate the agenda. Therefore, for tax reform to become a reality, it will be important for Congress and the incoming President Trump to take action early in 2017.

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International Tax | USA

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